A deal to keep the Aussie-built Holden Commodore alive, and maintain a sizeable workforce at the South Australian plant where it is made, has been knocked on the head.

Holden's parent company, General Motors, have been in discussions with enigmatic Belgian investor, Guido Dumarey, and his company Punch Corporation to take over the Elizabeth production facility and continue to build models based on the existing VF Commodore's Zeta architecture for almost a year.

Dumarey, who had promised to invest up to $150million to keep the plant going, has even gathered political support from key power brokers in recent months, including federal Industry Minister Cristopher Pyne, his opposition counterpart Kim Carr and South Australian independent Nick Xenophon.

But General Motors confirmed on Friday, the same day it announced production of the Cruze hatch and sedan would stop at Elizabeth in October 2016, the deal was dead and that the company will continue with its proposed plan to fully cease local manufacturing in 2017.

"General Motors and Punch Corporation have undertaken and completed a detailed global evaluation of a proposal from Punch Corporation to continue manufacturing vehicles at Holden's Elizabeth plant in South Australia," a GM international spokesman said in a statement.

"Both parties concluded that a viable business model was not possible for this case. Therefore the proposal will not be taken forward. GM and Punch have communicated on this decision.

"As discussions have been governed by a Non-Disclosure Agreement, neither party involved is able to discuss details of the proposal, nor the assessment."

General Motors added that the imminent closure of Ford's Broadmeadows and Geelong manufacturing plants later this and Toyota shutting up shop at Altona in 2017 has placed significant pressure on the supplier base for components that contributed to the deal becoming unviable.

It also said the significant shift in market demand for SUVs over traditional family sedans has continued to erode the popularity, and therefore long-term security, of large vehicles such as the Commodore.

"The challenges to domestic automotive manufacturing in Australia - lack of scale, high production costs, supply base contraction and increasing market fragmentation - persist and cannot be overcome for this business case," the GM spokesman added in the statement.

"In particular, the wind down of the supply base following the manufacturing exit of the three existing car makers, and the critical production mass they represent, is insurmountable.

However, General Motors left the door ajar for Punch, which currently builds and supplies transmissions for GM and has managed to salvage one of the American giant's European plants previously, to be involved in the sale process of the Elizabeth facility.

It also confirmed that Dumarey and Punch Corporation will continue to evaluate opportunities to invest in the Australian automotive industry in the future.

"GM thanks Punch Corporation for their proposal. GM will continue to consider Punch Corporation, along with other interested parties, to participate in the sale process of the Elizabeth plant and assets after GM ceases local manufacturing," it said.

"Punch Corporation will continue to pursue other business opportunities in the Australian automotive sector."